Platinum Investment Management Limited (PTM) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to today's Annual General Meeting. My name is Guy Strapp, and I'm delighted to address you as Director and the Chair of Platinum Asset Management Limited. I would like to begin by acknowledging that I'm speaking to you today from the lands of the Gadigal people of the Eora Nation. I also acknowledge the traditional custodians of the various lands on which each of you joined the meeting from today. I hereby pay my respects to the elders, past, present and emerging. It's now 10:00 a.m., Australian Eastern Daylight Time. The appointed time for holding the meeting, and I'm advised that the necessary quorum is present. The Notice of Meeting dated 13 October 2023, was published on the ASX market announcements platform and sent to shareholders. So unless there are any objections, I will take the notice as read. Okay, there are no objections, I declare the meeting open. This year, we are again holding our AGM as a hybrid meeting, which gives you, our shareholders, the opportunity to attend the meeting in person or virtually. We hope that in doing so, we have been able to encourage broader participation amongst our shareholders. Please allow me to now introduce your Board of Directors. Firstly, the Executive Directors: Andrew Clifford, Chief Executive Officer and Co-Chief Investment Officer; Elizabeth Norman, Director of Investor Services and Communications; and Andrew Stannard, Finance Director. And now my fellow Nonexecutive Directors: Anne Loveridge, Chair of the company's Audit, Risk and Compliance Committee; Brigitte Smith, Chair of the company's Nomination and Remuneration Committee; and Stephen Menzies; together with Philip Moffitt. We also have present, Rita Da Silva, the Ernst & Young partner in charge of auditing the consolidated group's financial statements. Before I get started, I'll hand over to our company Secretary, Joanne Jefferies, to take you through some formalities.

Good morning, everyone. As Guy has mentioned, I will take you through some of the procedural matters for today's meeting. However, before I do this, can you please ensure that your phones are switched to silent. Thank you. Now in relation to voting, for those shareholders present in the room, you should have received a voting card to enable you to cast your votes. If you have not received your card, please see one of the Computershare representatives at the registration desk outside. For those shareholders who are joining us online today in the top right corner, you should see 4 icons. You can toggle between these at any time during the meeting. When you select the vote icon at the top of your screen, you will see each of the resolutions that you can cast a vote on. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded, and you will see a green tick beside each resolution you have voted on. You have the ability to change your vote right up until the time the meeting chair declares the voting is closed. In terms of voting today, all resolutions are being voted on by poll. Voting is open, and shareholders in the room and online can now cast their votes on resolutions included in the notice of meeting and can do so until the poll is closed. Voting will remain open during the meeting, and the chair will give you a warning when voting is about to close. In terms of asking questions, all shareholders present in the room, online or by phone will have the opportunity to ask questions in respect of the items of business of the meeting. For those shareholders in the room, if you would like to ask a question, when we move to question time in relation to the relevant item of business, please raise your hand, and a platinum representative will bring a microphone over to you. For those attending online, you will need to select the Q&A icon at the top right. Select the topic your question relates to, and then type your question into the box at the bottom of the screen and select send. You are able to submit questions on any item of business at any time during the meeting. However, these will only be answered when we get to the relevant item of business. If you are attending online and prefer to ask a question verbally, we have an audio facility which is available. To use the service, please follow the instructions provided on the online platform, which are detailed below the broadcast. You will be provided with a phone number and meeting ID number to dial on your phone. Once joined, you will sit in a waiting room. When you are ready to ask a question, please press star 9 on your keypad, which indicates that you have a question. When prompted by the Chair, the operator will unmute your line and ask you to introduce yourself to the meeting and then ask your question. Lastly, this meeting is being recorded, and the recording will be made available on Platinum's website in the following few days. I'll now hand back to Chair to deliver his -- sorry, to Guy to deliver his Chair's address.

Thanks, Joanne. Let me start by sharing my reflections on the past year. Global equity markets performed strongly over the last financial year, with the MSCI All Country World Net index delivering 20.4% for the year despite the initial dampening effect of rising interest rates, several bank failures and weakness in the Chinese economy. The Platinum Trust funds, for the most part, also delivered strong absolute investment performance during this period, with the flagship Platinum International Fund returning 13.9%. The difference between the fund's performance in the index was largely due to the nuances of the index composition being heavily dominated by mega-cap U.S. tech stocks and further exacerbated by market weakness in China. The strongest performing funds during the period were the Platinum Global Fund Long Only, Platinum European Fund and Platinum Global Fund, which all delivered returns above 20% for the year ended 30 June 2023. Whilst our investment returns for the financial year have generally been very solid in absolute sense in order to grow funds under management and hence, profits and shareholder returns, our performance outcomes need to be attractive to particular market segments. And for a large number of these, it's still relative performance that matters. Furthermore, as we have previously discussed, competition for investors' savings is fierce, with index tracking ETF strategies crowding the marketplace. More recently, with rising interest rates and term deposits offering returns between 4% and 5%, an additional source of competition for investors' funds has emerged. Unsurprisingly, the asset management sector is under pressure, and Platinum is not immune, with the trend of net outflows continuing during the period. Whilst redemptions were dominated by some large institutional withdrawals, retail outflows, the predominant part of our business remains steady. Against this backdrop, funds under management at 30th of June 2023 was $17.3 billion, a decrease of 4.9% from the 30th of June 2022 closing fund of $18.2 billion. Average fund for the year decreased by 15.4% to $18.1 billion. Profit before tax was $116 million, down $20.4 million from the previous year in percentage terms, and earnings per share were $0.14 per share, down by $0.034. Total fee revenue decreased by 19.8% to $202.7 million, and performance fees decreased to $1.2 million. The main drivers of the decrease in profit and earnings per share were decrease in fee revenues, reflecting changes in average funds under management, an increase in employee expenses, specifically in relation to the investment team, and partially offset by improved returns from seed investments. Underlying profit after tax, excluding gains and losses on seed investments was down 35.3% to $76.5 million. With respect to dividends, the Board determined to pay a 2023 fully franked dividend of $0.07 per share, taking total dividends for the 2023 financial year to $0.14 per share, delivering a yield of 8% based on the closing share price on the 30th of June 2023 of $1.74. Since the 20th of -- 30th of June 2023, the share price has declined further. On the 14th of September this year, we began the execution of the company's 10, 12 limit share buyback program. As at the 14th of November 2023, a little over 4.5 million shares have been bought back. The Board's primary objective in affecting the buyback is to provide liquidity to existing shareholders and accretion to continuing shareholders, rather than necessarily to support the price of the shares. It is abundantly clear to us that fund under management growth, and consequently, growth in revenues is largely dependent on Platinum being able to deliver consistently good, absolute and relative investment returns for the flagship funds. This is what drives demand for Platinum's investment strategy and consequently, the share price. On the business development front, to meet the growing managed account segment of the market, we introduced new wholesale pricing for our international and Asia flagship funds, subject to minimum investment criteria. We also added new capability to our distribution team, with the addition of an experienced SMA investment specialist to actively market our wholesale fee arrangement in the domestic market. We have been reviewing our broader distribution strategy in light of the changing financial adviser landscape. Pivotal to this review is our product and fee offering. As such, we will be rolling out our wholesale pricing for the remaining Platinum trust funds in the near future with a lower wholesale fee to be made available for the Platinum Global Fund in the Long Only version. With respect to remuneration, strong weighted average investment performance over 1 and 3-year periods to 31 March 2023, the metric driving the bonus pool under the plan rules resulted in increased STI, short-term incentive rewards, for our investment team members. We acknowledge that our shareholders experienced a noticeably reduced financial performance. It is clear to the Board that remuneration outcomes for our investment team, the engine room of our business, need to be better aligned with the business outcomes. Accordingly, a key focus of the Board's remuneration work during the latter part of 2023 has been to initiate a review of the investment team's STI remuneration framework. Following this review, we are seeking to implement a number of changes, commencing 1 April 2024, which will include ensuring the bonus pool size is more heavily driven by revenue outcomes, placing more emphasis on 3-year investment performance numbers over 1-year numbers, and providing more transparency around metrics that drive allocation of pool to individuals. This year, we also continued to use shareholder and proxy adviser feedback as a key factor in our decision-making process for our executive key management personnel. The improvements made to our remuneration disclosures in our '22 remuneration report, which received strong support from shareholders at last year's AGM were also carried through and enhanced in this year's report. We also use stakeholder feedback to revise the KPIs for our executive KMP for the '23-'24 performance year, making the following changes: greater alignment of KPIs with financial outcomes, and introducing a risk gate opener and consequent management framework. Specifically, in respect of Andrew Stannard and Liz Norman's STI awards for financial year 2023, we used our discretion to reduce their balance scorecard raw scores by between 69% and 71%. This resulted in STI awards of 55% of the maximum potential, with approximately 1/3 of the awards delivered as deferred equity, subject to a 4-year service condition. For the last several years, Andrew Clifford has not received any short-term incentive awards, either in his role as CEO or co-CIO. This year, Andrew did not receive any STI under the CEO plan at his request. However, in his role as co-CIO, Andrew is eligible for STI awards under the rules of the investment team plans, as was the case for other members of the investment team. Under the terms of Andrew's employment contract, these awards must be delivered as deferred equity and subject to a 4-year service condition. However, in order to seek better alignment with future shareholder outcomes, Andrew has asked to receive these awards as performance rights under the Platinum Partners long-term incentive plan. That's resolution 3 for later today, subject, of course, to shareholder approval. If approved, these awards will need to be retested against the TSR hurdles of the plan before they can vest, and they will also be subject to an 8-year service condition. This proposal shows a strong desire by Andrew to align his personal interests with the interests of shareholders, and in my view, demonstrates a high level of integrity on his part. I therefore strongly urge shareholders to vote in favor of Resolution 3. Our work to improve our remuneration outcomes across investment and non-investment teams will continue over coming years to ensure we retain valuable talent and total pay is fair, appropriate and competitive. Resolutions 4 to 6 are seeking shareholder approval for the grant of performance rights to the executive KMP under the Platinum Partners long-term incentive plan in order to align executive remuneration with future shareholder value creation. We announced to the market on the 23rd of August 2023, that Andrew Clifford will be stepping aside as CEO in order to concentrate on portfolio management. I'm pleased to say that we are well progressed in our search for a new CEO and hope to make an announcement on this matter very shortly. Stephen Menzies, who has been a long-serving member of the Board, has elected not to stand for reelection this year and will be retiring at the close of today's meeting. His experience and insights have been extremely valuable to the Board, and I thank Stephen for his significant contribution. Thank you, Stephen. We have received several questions prior to the meeting that can be summarized as follows: what is the Board and management doing to improve investment performance, turnaround flows and thereby increase profitability and the share price? Well, the first thing I'd say is that, it's both the Board and management are deeply aware of the challenges that the business is facing. Senior members of the team hold equity in the business either directly or by deferred share awards. And like other shareholders, have been exposed to the downward share price movements. In addition, long-term incentive awards previously granted to staff have not met the TSR hurdles so far, which means that no awards have vested to -- for those grants. As such, the team is strongly incentivized to work hard to address these challenges. As I've already mentioned, the Board has taken other practical steps during financial year 2023, including the implementation of the share buyback as well as providing oversight and support to the management team as they take action to address business development and operational efficiencies. We believe that the splitting of the CEO and CIO roles should allow for greater focus on business results and investment performance that should, over time, improve share price performance. The Board is excited by the quality and experience of the CEO candidates we have seen, and optimistic, as I mentioned, that a high-quality hire is not too far away. Another common theme for question has been on expense control. Firstly, to provide some context around this, less than 130 staff delivered over $200 million in revenue in 2023, with a profit margin of over 50%. The business has been active in controlling expenses. Despite significant inflationary pressures, non-people costs, which represent 1/3 of our total costs are lower today than they were 5 years ago, thanks to a combination of cost control measures, most notably, the competitive retendering of key supplier contracts. On the people side, we have sought to reduce cash incentives in favor of share-based awards and better linked remuneration outcomes to the share price. Financial year 2023 cash STI was lower than 5 years ago, with much of the growth in share-based planned expenses being by way of noncash accounting charges. We are also well advanced with a review of compensation plans to ensure that they better align with shareholder outcomes. To conclude, despite the challenges facing the firm, Platinum's brand, as an Australian retail provider of active global equity, management remains strong. Our balance sheet also continues to be both robust and free of debt, which provides the measure of future flexibility. I thank you for your attention, and now invite Andrew Clifford to provide an update on Platinum's general business.

Good morning, everyone. What I'd like to do today is to just expand a little bit and go into a bit more detail on some of the items that Guy has been discussing. And as Guy mentioned, one of the most frequent questions we get from shareholders is, what are we doing to improve investment performance? So I'll focus on the international fund as it's -- and the associated strategies as they are our main money owner. But the international fund has over 5 years return, 6.3% per annum versus 9.9% for the market. You may choose whatever adjective you like to describe that, but it's clearly not a good result. The 3 years for the fund is 9% versus 10.4%. And I would say that, that's a result that again is not one to get particularly excited about, but it is one that is relatively, in fact, very close to the market outcome. So going to this question of what we're trying to do to improve performance, you would imagine that we would have a very detailed analytical effort going on internally to assess mistakes, where we've done well, where we haven't and so forth. So on that front, I can share one example, one of many that we did. So 3 years ago, clearly, in those -- there's clearly a big difference between those 3-year numbers and 5-year numbers. And one of the factors that held back our performance in that period, 4 and 5 years ago, was the short side of the portfolio. So Clay Smolinski, my co-CIO undertook an intensive sort of study of our shorting performance going back to the very beginning. And there were some very clear lessons from that, that we have now put into place. So in the 3 years since that, in a market that is up over 30%, the short side of the portfolio has made good money for our clients. Other changes we've made in recent years is bringing in Clay as co-CIO, who, I believe, is the finest investor that I have ever worked with. Nik Dvornak as a co-portfolio manager on the international fund, so bringing in additional perspectives on the portfolio. And then 18 months ago, Doug Isles, a long-term member of the team, both in his role as an investment analyst, and then as our -- heading up our investment specialist team. Doug came into a new role as Head of Investments to essentially manage the team and manage the investment process, and that has been a great help to both Clay and myself. But I just want to go back to those performance numbers for a moment. And I said, I'd point out that the 3-year number is close to market. And if we think about that 3-year period and the things that went on, first of all, we had the fallout from the COVID pandemic, including what was a spectacular speculative bubble in growth stocks. We had an extraordinary lift off in inflation, first we've seen in 40 years, and the biggest interest rate tightening cycle in, again, 4 or 5 decades. We've seen a property collapse in China, one of the biggest asset markets in the world. We've had bankruptcies of middle-tier U.S. banks and Credit Suisse. We also have watched a deteriorating relationship between the U.S. and China. We've had a war in Europe and now 1 in Israel. Over those 3 years, running the fund, which is a long/short global equity fund, we've averaged 70% net exposure to markets. And on face value, you can certainly see that we've been positioned in all the wrong places. We've been in China, we've had minimal exposure to the big growth stocks that have driven the market particularly this year. And yet, we've still kept pace with the market. All I would suggest to you is that there are some good things happening underneath the surface and that the 3 year number being so much better than the 5-year number, also suggests there's some improvements underway. Now I don't want you to take it that I am satisfied with these results. I'm not, and nor as a team. And we continue to do work around our results and around portfolio construction that I believe will, like that short review, lead to better performance going forward. Clearly, with the new CEO coming on, there will be a fresh set of independent eyes to look over what we do and, if necessary, make changes. But for what it's worth, I remain confident that our approach to investing remains relevant and that we can produce good outcomes for our clients. But there is more to the performance of Platinum than just investment performance. And again, to touch on some of the things that Guy was talking about. But again, along with that question about what are we doing to improve performance, investment performance, there is also what are we doing to improve investment inflows and profits. Well, there are a number of issues in the business that need to be resolved. The first one is our product offering. Our funds, predominantly, are global, long/short equity portfolios, or regional but global equities and they're long/short. And they're long/short in a specific way in that we maintain significant market exposure. So in the lingo of the institutional world, we are long/short equity, long biased, everything needs a tag. This is a product set that is deeply out of favor with investors. As the investing world has changed, and we have professionalized the role of asset allocation when a professional asset allocator wants to put X percent into global equities, they do not want their underlying manager changing that by changing their exposures to markets. Now it may just be that it's deeply out of favor because it hasn't. And this is something that's affecting not us, but similar managers around the world. And it may be that it's just that, this approach has not delivered great outcomes for some time. But it may be that this approach is simply out of favor for good. And we see that even today, where we have a great opportunity to bring money potentially into our Japan fund. Japan is flavor of the day. Our returns there over the long term are outstanding. But in talking to potential clients, they don't want a long/short fund, which is what it is. So there's 1 very obvious. There's a number of issues around our product set that need to be looked at on. I'm just discussing one. But there's 1 obvious thing for us to do, and that is to take out the long portfolio that we run within our long/short fund and make that a new offering. Clearly, we do already have a Long Only fund here already. But the problem with that, for again, for the professional asset allocator is that it allows us to have significant cash holdings, which again, goes against what they desire. So we've long had an approach of telling clients what we think they need. Over recent years, we are trying to change our ways and listening to what they want and where we can help them. So that is a fundamental change that is starting to take place. The other issue in the business is pricing. People have long noted that our fees are high. This, I think, actually, we need to be more clear about. For the traditional retail market where we operate, they're not particularly high and they never have been. But once you move away from those markets to wholesale and institutional markets, clearly, our fees are way out of the market. The problem that we face in the business today is that traditional retail market is changing rapidly. And so here, I'm talking about the financial adviser and their clients. The move underway in that market is for the financial adviser to outsource the management of their portfolio to consultants. This is the reference that Guy made to the separately managed accounts or SME market. And clearly, this is our traditional market, but we do not or have not had a pricing set or a pricing position that works in that market. As discussed, that has now changed, and we've put that in place. We've put in a business development head to now work on establishing relationships with those consultants who advise the SMAs. The third thing that needs to be resolved is distribution, or let's be more direct about what distribution really is, is sales. We do not have a traditional sales team in our domestic market. Indeed, our investment specialists, so I believe, do an excellent job, provide primarily a client servicing function at which they're excellent. But the world has changed. It's become extraordinarily competitive in terms of the offerings that are there and available for a financial adviser or for the consultants, I should say, really. So even in just our area of global equities, they have the choice today of hundreds of options. But we compete not just against them, we compete against private equity, venture capital and a whole raft of products that are there, as well as, of course, passive products as well. We need to do a far better job or need to put in the resources to convince potential clients of the benefits of using us. And again, we've started to look to recruit in this area. So we have started to make some of these changes, but there is a lot of work to be done. And with a new CEO coming in, we'll have someone who is well qualified to lead this process. Thank you very much.

Thank you, Andrew, for the update. Ladies and gentlemen, we now come to the items which comprise the formal business of the meeting, as outlined in the notice of meeting. Voting on all resolutions will be conducted by a way of a poll. Each resolution set out in the notice of meeting is to be considered as an ordinary resolution and as such, must be approved by a simple majority of votes cast by shareholders. I will address any questions or comments that have been received under the relevant item of business. I will take questions firstly from any shareholders who are attending in person and then from shareholders joining us online. And finally, from shareholders using the audio facility. Shareholder questions received prior to the meeting, which are relevant to the business of the meeting will also be addressed under the relevant item of business. The first item of business is to consider and receive the consolidated group's financial report, directors' report and auditor's report for the financial year ended 30 June 2023. There is no vote on this item. These reports are published in the 2023 annual report, which was lodged with the ASX on the 23rd of August of this year. The purpose of this item is to provide an opportunity for shareholders to ask questions and make comments about these reports. Shareholders will also have the opportunity to ask questions of our auditor, Ernst & Young, relevant to the conduct of the audit and the auditor's report. I'll now invite comments and questions on the financial statements and reports as well as questions regarding the general business of Platinum, and start with questions from the room.

[indiscernible], just a quick question on ongoing dividend policy. How do you see it playing out from here, particularly as you were positioning buybacks in as well?

Mark, well, the policy has remained fairly much unchanged over the decades. So we seek to pay out above 90% of earnings in the form of fully franked dividends, and we continue to do that.

[ Wayne Paris ] is my name. As always, thank you for your time today and throughout the year. The question, I might have is misunderstood, but we'll see how we go. When Andrew was talking, you were talking about the possibility, I think, of all of the funds having a Long Only option? That's the question. So have I got that right? And if so, what's the -- is there a plan to allow current holders to move their funds into such offerings? Or how are you looking to have that work?

So at the moment, really, the plan is to focus on the Long Only offering, probably more on the wholesale institutional area. Like in retail, we already have a Long Only offering, which for the moment, we haven't made the decision to make that a fully invested portfolio as yet. I think it's unlikely that we would make those changes across the board in the retail market. That's not where the concern is, it's more in the institutional space. So it would be more if a client wanted to give us a substantial -- some $75 million, $100 million for a Japan-only like Long Only offering, we're certainly in a position and we would do that. To create new collective investment vehicles, you need to be clear that you are going to get up around that $100 million mark, it's the thing and at the moment, I don't particularly -- we would -- it would be a case-by-case basis. But at the moment, there'll be -- there's no particular plan to change that. But again, you see, they might have different ideas.

So we move to questions online. The first question online comes from [ Mr. Stephen Mayne ]. Regal Partners briefly became a substantial shareholder in Platinum and then disappeared. Their share price has plunged from a peak of $17 in late 2019 to $2 recently. Did we have any discussions with Regal? What is the size of their current holding? And how much did they lose, buying a substantial stake in our business?

So Regal did have, I think, through the funds business, have a substantial stake, which is now non-substantial. So they've sold down slightly on that position. But I can't comment on any other discussions that we did or didn't have with Regal and nor on their share price movement over the last 6 years, 5 years.

Next question, also from [ Stephen Mayne ]. Many of the best known -- that has disappeared. I will just -- probably take the next one. Next question first from [ Stephen Mayne ], again, relating to Regal. So despite our share price performance, we still have around 21,000 retail shareholders, how many of them have been or once were also clients of the firm?

Well, we currently have about 19,000 retail clients, and we have a number of retail clients who sit under the platform. So we don't have visibility about the exact number because there's always some crossover across that. But the numbers, indicatively correct, yes.

Okay. Another question from [ Stephen Mayne ]. Could you please comment on how relations are with our founder and largest shareholder, Kerr Neilson, since he retired from the Board 12 months ago and then became a public critic, calling for M&A discussion and separation of the CEO and CIO role?

Kerr remains a substantial shareholder of the business, and I have conversations with Kerr on a range of topics, sometimes frequently and sometimes less frequently. I think we have a good relationship.

Okay. Another question from [ Mr. Stephen Mayne ]. For the first time, our market capitalization of $695 million has recently fallen below our claimed net assets of $752 million. Could the auditor please comment on which assets, if any, were examined for impairment, leading into the full year results?

Maybe I just have a crack in, if that's okay. The net assets of the firm were about $329 million as at the end of the financial year. So I'm not sure what you're referring to there.

Question from [ Mr. Mariano and Ms. Jacqueline Castillo ]. In a business such as Platinum where the culture is so intimately tied to the investment process and to the CIO, how does the Board and the CIO think about tensions developing between CEO and CIO?

For my experience, there's always a healthy tension that's absolutely appropriate in the business between the Chief Exec and the Board for that matter, as well as between Chief Execs and the senior team, including CIO. So I think that's the dynamic that is appropriate to play out, and there will always be different views across the business. And yes, they'll come to longer heads from time to time, that's what you expect.

Final question from [ Mr. Stephen Mayne ]. Many of the best-known names in equity fund management have exited in recent years, including Hamish Douglass, John Sevior and Kerr Neilson and Rob Luciano. Does Andrew Clifford still have the fire in his belly to keep going when the whole sector seems to be in structural decline with the rise of industry funds and ETFs, which have delivered long-term better performance than listed equity managers? And how does Andrew think he will go answering to an external CEO, one to be frustrating, not to be in control.

Thanks, [ Stephen ]. I love my job. And indeed, I think about it is that when things are not traveling well and things aren't easy, I love it even more. Like, I don't understand. I mean, I'm not going to comment on the people you've mentioned who have great careers and moved on. But you will often see managers leaving and saying it's all too hard. I mean, this is when it's great. So all I know is that, I don't know if anyone's ever said I have fire in my belly or not. I'm not quite the firing belly sort of person. But anyway, I think it's a great job. And it's a privilege to have it. I mean, I get to come in and talk about, read wonderful things with the team. The other day, we had a presentation from one of our tech analysts on the importance of the switching network in a server farm for AI applications and very arcane. And we didn't even get to the point of whether we should own the company that provides it, but that conversation is to come. It's a great job. So external CEO. Well, I have been part of the process and have interviewed the CEOs, and I think that we had some great candidates. And look, I think that because of the changes that need to take place in the business, I mean, I think it's just a reality. And I mean, I've -- I'm all about wanting this company to do well. So yes, there are probably, as I said, to the CEOs like, whatever they come in and do, I obviously already disagree with it or I would have done it. So that's going to be -- there are going to be times where that's difficult. But I -- that's just what we need to move forward. So I'll work with that.

No further questions.

Mr. Chairman, I came late, I apologize for that. But my name is [ Michael Hoy ], and I have to say I'm totally dismayed at the way my investment in this company has been virtually, almost absolutely decimated over the years. Now I am further dismayed at the -- what seems to be a public spat with the biggest shareholder. And it being dismissed as you regularly have conversations with him doesn't seem accounted in my book. I'd like to know what is being constructively done to repair that relationship and to probably ensure that it's seen as being repaired and he's back on side with the future planning of what this company is hoping to do in the way of a turnaround?

Sure. So I think you'd be referring to an article in the financial review from February.

Yes, not just that. I'm confident, well, as a result.

Okay. So I presented to the -- and I think it was about the week of our half year results. And I attended the analyst briefing at that time. And yes, there had been some comments flowing backwards and forwards in the press. It wasn't our place to publish a counter debate. I mean the [indiscernible] applies to hold a boxing match. We've, as I said, had frequent conversations with Kerr and with members of the Board over that period. But it's up to Kerr to determine how he wants to view his stake in the business and how he views the business as a whole. I can't answer on his behalf what he thinks of us as a firm. He still holds 20% of the shares. And he's free to do with those shares what he chooses fit. I'd prefer us not to have public spat.

Well, I agree with that. Well, it seems like an enormous overhead in his company. With great uncertainties the one who basically plans out and [indiscernible] in the market and as a shareholder or the chairman who is having more than just a regular [indiscernible] -- I'm confident and believe that it's -- this is being resolved, whatever these differences are...

Well, from my point of view, again, I can't speak on behalf of Kerr. From my point of view, the conversations I've had with him have been appropriately balanced. He has not said to me that he's going to dump his shares. Of course, he has the right to buy and sell shares in the firm, just like anyone else in the room. I'm happy to ask Kerr if he would like to make any form of comment?

I didn't realize that he is in this room. I will ask him anyhow. So...

There's no spats that I'm aware of. There's differences of points of view, which is inevitable, I believe. I do not feel that the remuneration structure is appropriate to achieve the ends we need. But in every other respects, I'm pretty supportive of the changes that are taking place, and very diligent search that has been undertaken. And I'm very hopeful the new CEO can introduce changes that allow the company to really achieve much stronger investment performance. And I think several things are well in place for that to keep building. I think we've already seen some improvement, but I think, to expedite -- a new CEO will expedite that improvement. So there's no fundamental agreement. I do recall that the work of a journalist is to stir things up. That's not a mystery to anyone. So the words that were chosen to be reported by the journalists were not my words. So I think, I need to say no more than that.

Thanks, Kerr. Thank you for those questions. First resolution for voting on concerns my own reelection. So I will hand over to Brigitte Smith, Chair of the [ Nomination and Remuneration ] Committee to handle this resolution. Thank you, Brigitte.

Thank you. Thank you, Guy, and it's good to give his voice a rest. Okay. The first resolution that will require a shareholder vote is the reelection of Guy Strapp as a Non-Executive Director. The company's constitution provides that a director may not hold office for a continuous period in excess of 3 years or past the third Annual General Meeting following the director's appointment, whichever is longer without submitting for reelection. Guy last stood for reelection at the 2020 AGM. He's therefore retiring from office in accordance with the company's constitution and offers himself for reelection. The Board is confident that Guy has the capacity, the requisite skills, experience and independence to discharge his obligations to Platinum. And I now call upon Guy to provide a statement in support of his reselection -- excuse me, reelection, so not much of a break for your voice.

Thank you. That's all right. As we've been talking, look, there is still -- there's still much work to be done. There is a lot in train. And I think that over the 3 years as my tenure as Chair of the Board, we have put a lot of steps in place. There's no silver bullet and it takes time to reform a firm like this. But these are the drivers that we'll see us improve investment performance. Andrew referred to sharpening our distribution, some further product refinements, whether it be long only, other potential investment capabilities to diversify the base, appropriate cost management, nurturing our talent, getting the right alignment around compensation structures with outcomes. And those sorts of topics have been the things that I've focused on over the last 35 years in my career is, I'd call them the keys to success in any firm, and that's where my experience has been grounded over those 35 years. And I think, therefore, I bring an appropriate set of skills to the challenges in front of us. I think I agree that Platinum has a strong brand, but we need to secure that. We have a healthy balance sheet, and that gives us some opportunity for the future. And there is upside opportunity. I'm looking forward to working with the new Chief Exec and extracting maximum value for our clients and our shareholders. Thank you.

Thank you, Guy. So the screen up there shows the proxies received for and against this resolution. In regard to open proxies given to me, I will be voting in favor of this resolution. So I'll now take any questions or comments on the reelection of Guy Strapp and I'll start with questions in the room. No? Okay. Now move to questions online, Doug.

I have a question from [Mr. Stephen Mayne.] Regal recently bought Chris Mackay's 6.6% stake in Magellan. Where we given an opportunity to buy the stake or did we read about the transaction in the newspaper? As Chairman of this company, how well connected is Mr. Strapp to the key industry players as consolidation plays out?

I can't comment on Chris' shareholding, but I have, not just conversations, I meet face-to-face with, a number of our key players, CEOs, CIOs from a number of our peers in the Australian marketplace. So we don't have a formal club, but we do get together and talk about common issues.

That's all. Thank you.

Okay, great. Any telephone questions, no? I'm now going to hand back to Guy to do the remainder of meeting as the Chair. Sorry about your voice.

Thanks, [Brigitte]. The next resolution is the adoption of the remuneration report for the year ended 30 June 2023. The 2023 remuneration report forms part -- the 2023 remuneration report forms part of the company's annual report and provides disclosures relating to executive and nonexecutive director remuneration. Whilst it should be noted, the resolution is advisory only and nonbinding, the directors take shareholder input on this matter very seriously. In accordance with the Corporations Act, the company will disregard any votes cast by key management personnel, whose remuneration details were included in the company's 2023 remuneration report or by any closer related parties or proxy holders of any such persons. I note that the institutional proxy advisers, [Axi], CGI Glass Lewis and Ownership Matters have all recommended a vote for the adoption of the remuneration report. The Board also recommends shareholders vote for the adoption of the remuneration report. The screen shows the proxies received for and against this resolution. And in regards to open proxies given to me, I'll be voting in favor of this resolution. I'll now invite questions on Resolution 2, starting with questions in the room. There's no questions, we will move to online questions.

We have a question from Mr. [Stephen Mayne]. Thank you for disclosing the proxy -- thank you for disclosing the proxy results to the ASX with the formal addresses. It looks like a narrow strike with 29% against the [Rem report], but the turnout is low. Please can you reclarify which proxy advisers recommended against any of today's items, why there was a 15% vote against the Chairman's reelection and whether you know if founder, Kerr Neilson has voted or intends to vote in the room today?

Okay. So the -- the proxy adviser was ISS. We have conversations with all the proxy advisers and major shareholders. They determined, and unfortunately, and I think there was some confusion between the compensation paid to Andrew Clifford as CEO, and that component, which relates to his role as co-CIO, and I think it was the comingling of that, that led them to believe that the remuneration committee was acting inappropriately by making a recommendation that Andrew, in his role as CEO, should have been given a large payment. As we discussed earlier, Andrew was entitled to a payment under the investment team plan. That was to be taken all in deferred rights. There is a resolution forthcoming, that says that he not only wants to do that, but he wants to roll it into the partner's plan, which means it's an 8-year deferral effectively and retest it against TSRs. So if anything, we've gone from -- it was absolutely appropriate under the planned rules, et cetera, to something that's even more conservative and has greater alignment with shareholder outcomes. So it's unfortunate that in that particular instance, the proxy adviser recommended a no vote, and I was bracketed up with that because I'm a member of the Nomination and Remuneration Committee, and have served on that committee for 3 years. They deem need to be guilty as well of making an inappropriate compensation recommendation to our Chief Exec, which I think we have explained and articulated is actually not the case. So yes, on those votes, unless the room decides differently, it will be a narrow strike, and we'll just have to work better over the next 12 months in communicating those outcomes. Obviously, a large chunk of that will go away because we'll have a separate CEO and a separate CIO by the time to the next AGM, but we'll need to make sure that we clarify any confusion there.

All the other proxy...

All the other proxy advisers voted in favor.

So every...So the question was that...

Sorry. All proxy advisers voted in favor of all other resolutions, including this one.

And the vote against...

And ISS voted in favor of all resolutions, except my reelection and the remuneration of the board.

And anything about Kerr's intention that you're aware of? That's the only question on this topic.

Okay. No telephone?

No telephone. Sorry, yes?

We have 400 million shares, and we voted less than 200 million. I'm not very good at math, but less than half the shares have been voted. Is there a reason why there is such a big absentee?

Okay. It's just voter choice -- shareholder choice. Yes, I mean we had more than 400 shares [Indiscernible].

It's more like about 580 million. And the reason is we have quite a large retail shareholder base who probably have individually relatively small amounts and therefore, probably don't really want to be bothered to vote, but in aggregate, they will add up quite a lot. So the institutions seem to vote, but the institutions aren't very huge amount of our register. They're about 1/3.

I'm just saying that less than half -- less than half the shares have been voted.

Correct. It's always that way. This is not unusual versus other years. That's just the way it seems to be with our register.

[indiscernible] figures were at.

Yes.

Thank you.

So there's no other questions?

No other questions on this one.

Okay. So we turn to Resolution 3. This relates to the grant of procurement rights under the partner Platinum Partner long-term incentive plan to Andrew Clifford in place, is one I had previously explained in place of his STI, his short-term incentive award that he would otherwise have been entitled to take as deferred rights. This proposal shows a strong desire by Andrew to align his personal interest with the interests of shareholders, and demonstrates a high level of integrity on his part. If this resolution is not passed by shareholders, Andrew will receive his STI rewards as deferred rights under the deferred remuneration plan, in accordance with the terms of his employment. There's a detailed explanation of the difference between deferred rights and performance rights in the explanatory notes within notice of meeting. I note the key institutional proxy advisers as we have just discussed, have all recommended voting for this resolution. And the Board, with the exception of Andrew Clifford, who is abstaining, recommend shareholders vote for Resolution 3. The screen shows the proxies received for and against this resolution. In regards to open proxies given to me, I will be voting in favor of this resolution. I'll invite questions on this resolution starting from the room. If not, we take any online questions.

We have one online question from Mr. [ Stephen Mayne. ] Could Andrew comment as to whether he has fielded any recent offers for his 5% stake in the company, and why he needs ongoing LTI and STI grants to stay motivated, when he already owns 33 million shares in the business?

Well, to the first part, no, I own exactly the same number of shares today as I did on the first day of [ Allison. ] So no intention of selling them. I'm not particularly motivated by money, so I don't need any of that to keep me there -- even, nor does my 6% or 5.6% of the company keep me motivated. My motivation comes from elsewhere. And it's primarily about ensuring the long-term success of this company. Having said that, what I would say on the topic of remuneration for the team is that in these businesses, it's an incredibly important part of the structure of the business. And we've already acknowledged that what we have in place is not working, and it needs to change. But my view very clearly is that, if Platinum is to succeed from here and we are to build it into something bigger and better than we are today, it is critical that the team participate. The team who bring that into life are well rewarded for it, because the very simple thing that will happen is if they're not rewarded, is those people will get up and walk, and they'll go into it themselves. So -- but don't worry, [Stephen], my motivation comes from another place.

Any telephone?

No telephone questions.

Okay. Thank you for those questions. Resolutions 4, 5 and 6 relates to the grant of performance rights under the Platinum Partners long-term incentive plans of each of the Executive Directors, Andrew Clifford, Elizabeth Norman and Andrew Stannard. Separate resolutions will be put up for each grant. There's a detailed explanation of the performance rights in the explanatory notes within the notice of meeting. However, in summary, each grant performance rights is divided into 4 equal tranches and tested annually over 4 years. A tranche will only vest if the relevant total shareholder return performance hurdle is achieved. If the performance hurdle for a tranche is not achieved, that tranche will lapse. Exercise of the performance rights is also conditional on continuous service of 8 years, subject to good lever provisions. The performance rights are granted as a long-term incentive to retain key talent and to align our Executive Directors remuneration with long-term value creation for shareholders. I know that the key institutional advisers, as we've discussed, have all recommended voting for these resolutions. So to each one in turn, Resolution 4 is in respect of the grant performance rights to Andrew Clifford, Platinum's Managing Director and Chief Executive Officer. The Board, with the exception of Andrew Clifford, who abstained, recommends shareholders vote for resolution 4. The screen shows the proxies received for and against this resolution in regard to open proxies given to me, I will be voting in favor of this resolution. I'll now invite questions on this resolution starting in the room. If not in the room, we move online.

There are no questions online or on the phone.

Or on the phone? Okay. Thank you for those. Resolution 5 in respect to the grant of performance rights to Elizabeth Norman, Platinum's Director of Investor Services and Communications. The Board, with the exception of Liz, who has abstained, recommends shareholders vote for resolution 5. The screen shows the proxies received forward against this resolution. In regards to open proxies given to me, I'll be voting in favor of this resolution. I'll now invite questions on the resolution starting in the room or online or phone.

There are no questions online or on the phone.

Thank you. Resolution 6 is in respect of the grant performance rights to Andrew Stannard, Platinum's Finance Director. The Board, with the exception of Andrew has abstained, recommends shareholders vote for Resolution 6. The screen shows the proxies received for and against this resolution. In regard to open proxies given to me, I'll be voting in favor of this resolution. I'll now invite questions on this resolution starting in the room or online.

There are no questions online or on the phone.

Okay. So ladies and gentlemen, that concludes the formal business of the meeting. A Computershare representative will now collect the voting cards from the floor. For those voting via the online platform, voting will remain open for a further 2 minutes, following which voting will close. Please ensure that you have cast your votes on all resolutions. The results of the poll will be announced to the ASX later today and published on Platinum's website. Andrew Clifford will shortly provide his informal address on investment performance in global markets more generally. He'll also take any questions that you may have. If you are joining virtually, you will need -- you'll be able to ask questions to Andrew through the online platform and telephone line, which will remain open. Please ensure that you stay online to hear from Andrew. [Voting]

I now declare the meeting closed. Over to you, Andrew.

So I'll just make some brief comments on markets and opportunities and then happy to take your questions on whatever topics you'd like to discuss. If you look at the commentary in the press on markets, there's still a huge focus on where interest rates are going and inflation. And I think like all discussions about macro, there's 2 issues with them. They don't help very much -- help investors particularly. But I think this one really misses the point. And the point at the moment, I think, is simply where -- not that how much further rates are going to go up, they're unlikely to go up a lot more, inflation is clearly softening, short of some change in government policies. That's probably the direction for the year or 2 or 3 ahead. The question is how much can interest rates come down? And I think where I would probably come down on that is I think it's going to be very hard for rates to come down a great deal without particularly reigniting those inflationary pressures. So while we might get a rate cut or two in the years ahead, I doubt the 10-year interest rates, which are the most important one for the stock market, are going to change a great deal. And I think that is the new environment we're in. I may or may not be right on that. But what it's worth, what does this mean? I think that we have a very clear historical relationships between interest rates and the economy, and interest rates and the stock market. And it's simply this, with a long delay, the tightening of monetary policy, the increases of interest rates create recessions. In Europe, that's already apparent, and you can't miss it. In the U.S., that's far from clear, but we will need a very big change from history. So I simply expect that it's highly likely, not only that we get a recession in the U.S., in the year or 2 ahead, that it will be a very deep one. And the relationship between that and the stock market is also a simple one. That impacts earnings and ultimately, stock prices. And in fact, underneath the surface, we can already see this happening. It's a daily occurrence for companies to be coming out, either with disappointing results or downgrading their outlook for next year. And we're seeing many stocks fall very heavily, while the indices are held up by the big cap names -- going, very apparent in both the U.S. and Europe. I would expect very simply that we will get a broad bear market in the U.S. and developed markets generally. It's interesting while this is going on. Europe has also been very strong. But that may not occur, and it's certainly not the basis on which we make investment decisions. What we are doing is looking for where the opportunities are in the markets here and now. And so what I would point out is that there are many sectors or individual companies that are already experiencing their own recession. So for example, in the U.S. housing market, mortgage applications, which are a function of people buying homes, but also refinancing their mortgages are down around 95%. This is an industry that's in an extraordinary recession. And there are companies whose earnings and revenues are a function of that. One TransUnion, which is a credit bureau. So whenever you, as a consumer, make an application for credit, whether that's a mortgage, a car loan, a credit card, a personal loan, the lenders access TransUnion's data to make a credit decision on the on that application. So clearly, one part of their business is in steep decline and the others are in clear sight of a fall, being the credit cards and car loans. The TransUnion as a business has changed dramatically. Those parts of the business account are already mortgages a very small percentage of their revenues. And that general typical finance part of the business is less than 30%. Their data is being used for more and more applications. So for example, insurance underwriters will use it to make pricing decisions when you apply for insurance. For fraud detection, when you get on your phone and buy something and the credit card company wants to know whether it's you or not, they potentially can use TransUnion's data to make that decision. When an e-commerce company wants to deliver up a recommended item to you for purchase, they can also use this data. Now all of these things can deteriorate further in a recession. The TransUnion was one of the much-loved companies of the recent bull market. It was seen as a high-quality stock that had many years of growth ahead of it. And of course, what's happened with interest rates has been a big -- put a big pause in the growth of that business. So having traded at 35x earnings and higher in the recent past, today on those reset earnings expectations, you can buy it on about 15x. That may not be the end of the bear market in that stock, but we have an initial position. And this, I think, is a great opportunity, whatever happens next. Or we can look at Allfunds, a European company. And what Allfunds does is provide a network between fund managers and their clients. So in a sense, it plays the role of what the wrap accounts or the fund platforms do in Australia, except it's much more akin to Visa or Mastercard, where it really provides a network to exchange data. So it allows straight-through processing of fund applications and redemptions and all the sort of ancillary services that go with that, like tax reporting and so on. And it does this for free for the financial planner and their clients, and for 3 to 5 basis points cost to the fund manager. If you know anything about what's charged for that service in this country, you'll know that's an extraordinary bargain. But Allfunds as a business, obviously, it's -- the revenues are a function of the amount of assets that are under its administration as such. And clearly, we've had weak stock markets, but we have had an extraordinary bear market in bonds, which account for 60% of the assets. Additionally, FUM flows is with higher interest rates, flows into funds of all types have dried up. So the growth of this company has again slowed dramatically. But it is undoubtedly a company that will take market share for a long period of time, and will grow again once we see the end of the fall in bond prices, assuming the stock market falls are not too dramatic. But again, we're buying a very high-quality business on a mid-teen multiple. So there are 2 examples of companies that have already had their recessions. We can go elsewhere. Memory chips for computers in your phone and servers and the like. This is an industry that has already seen a huge collapse in demand and prices for memory chips, post all the excitement in COVID when we're all buying new phones and laptops, and there was a huge investment going in by the very large e-commerce players and the like. So we've had a collapse here, massive oversupply. These are companies that have been in and out of the portfolio for a long time, but companies like Micron and Samsung and SK Hynix who are both already seeing a strong recovery in their share prices well ahead of the bottoming of that cycle. But there's the one place where there is obviously already a recession at least of sorts underway, and that's China. And of course, I'm not -- the stories about the dire situation in the property market in China are accurate. But what is not reported is how the rest of the economy is going or not widely reported. So for example, we see car sales at all-time highs. We see e-commerce volumes and advertising, up 20% on a year ago. And even though last year was a particularly miserable year in China, remember, the volumes never actually fell to any great extent. So we have companies like ZTO Express. It's a business of parcel delivery like FedEx or UPS in the U.S. They will deliver 30 billion parcels this year, up from 6 billion 5 years ago. UPS and FedEx combined globally will do around 12 billion. The company's -- one of the reasons this was an opportunity, it was in a very fiercely competitive area where pricing competition has receded, and they are seeing a huge increase in their margins. There also have been continually taking market share as the low-cost provider. So on what we expect to be around 24% volume growth for them, we think their operating earnings can grow at the rate of around 50%. And you can buy this stock for 15x earnings. There's another set of opportunities out there in the market today, and that's where the economy probably doesn't matter that much. In Japan, which we've spoken about a lot in recent times, there's significant corporate reform going on, mainly around how they are using -- better using their balance sheets, returns of excess cash and securities, sell-downs of properties that are held access to use and focusing the company's on profitable business units. So we have a company like Toyo Seikan, maker of aluminum cans, a pretty simple business. When we were buying it originally over a year ago, it traded at a discount to its cash and securities and real estate holdings. It's been a good performer, but their recent announcement or a few months ago, they announced that they would be returning, would be selling off excess securities and real estate, refining their business portfolio and stock buybacks and dividends were at that point would account over the next 5 years for more than half their market capitalization. People may question the story around Japan, but the -- this reform has hit the Toyota Group. We've seen that in their own pronouncements and clear actions by Aisin, one of the group companies. And again, Toyota is one of these extraordinary companies who have played the whole EV cycle to perfection, and are now having refused to go early, are now in a great position with their hybrid lineup and what they're promising to be solid-state batteries in their vehicles by 2028. Or another, where the economy doesn't really matter is UBS. It's an investment bank, well, it's really a wealth manager, I should say. Not probably the most inspiring of businesses, but they were recently gifted some tens of billions of dollars when they were asked to take over Credit Suisse in its bankruptcy. And why I say tens of billions of dollars as they haven't finished counting quite how many it is as yet. Finally, there are still great opportunities on the short side. There are many of the companies that were part of the speculative boom of 2021. Many of these businesses, particularly around -- or as an example, I should say, around the area of green hydrogen, that clearly have business models that -- well, they do not have a business model. And yet many of these companies still hold market capitalizations of billions of dollars, while they lose vast sums of cash each quarter, and are in the process of running out of money. There are, of course, a lot of very expensive stocks as well, still in some of the favorite areas such as software. So what I would say to you is there are extraordinary opportunities in markets. They're here right now, and that's where we'll be focusing our time. Thank you. So very happy to take any questions.

Andrew, what's the current net long position of the international fund?

Okay. So the long position is about 80% and the short currently take that down to a net position of around 60. Make those rough numbers because they do change day to day.

So really, I understand all the logic of your stock picking and I think that makes a lot of sense. The question is, when you're only 60% long, you're really making a big bet on macro, which is the belief that we will have better opportunities in the future than we have them to go. And yes, it would seem you're finding bets you can make today that are going to return you potentially double-digit returns. It seems like if you're wrong on the macro, then it's going to yet again produce results that unfortunately not matching the index. And hence, of course, that affects the future outlook of the company.

Yes. I didn't understand your point. What I said on the long side of the portfolio is this is the -- what we're seeing every day are new companies coming out with poor results in those downgrades. And we're getting spectacular moves, 20% and 30% moves in very large stocks. So even a case like a company like TransUnion, which we bought it, I think originally around 65, it ran up to 85. We sold some of it, came back to 65, but had the obvious bad result that was coming, dropped to 45, we bought some more, it's back up to 50 -- or over 50. So I think strategically, like, yes, I could rush out and spend every single dollar on those companies that we're buying. But I think -- I mean, I think, tactically, you just want to buy your time a little bit here, when there are new things coming out every day. And similarly, on the short side, we -- the changes we've made is we have much tighter controls around position sizing and stop losses and the like. So I don't know, it's about each position making their money in a good time. I don't particularly believe -- there are days where the market goes up and we do better, days when the market goes down and we don't do better. The net -- the portfolio is so different to what that index looks like, that you're not particularly getting that outcome.

I understand. But over time, if your approach is right, and it's so hard to know the future of the macro that I can't say you're wrong [Indiscernible]. No one can prove another's position or macro is wrong. You would clearly be outperforming the index. And the problem is the -- it's very hard to do that.

But it's not a static position. So we do change positions. And not that long ago, we were much closer to 80% or [Indiscernible]. So we're not static, and as I said, I talk about the macro at the start because that's what everyone wants to talk about. But in nowhere in the portfolio is there, is particularly a bet that I'm betting on the U.S. recession or a European recession. All I'm saying is that's sort of my base case. And I know fully well it may be different to that. And that might mean that if I see interest rates falling, then that might be the time to really step up the position in TransUnion, for example. But it's not...

[indiscernible] just like 60% long tells me you think there's some really good opportunity coming in the future that you can't see today, but I really should stop [indiscernible] somebody else have a say.

Thank you, Andrew. Just a couple of notes I've made while you've been talking. Just -- you talked about the recession in China. So I guess the obvious question to ask there in terms of investments, how exposed or not is the other funds to the Chinese property downturn? A separate question. In terms of some of the business changes that you've been talking to, do you see artificial intelligence coming into some of the investment processes that you -- the people are using? And if so, can you talk to that? The last question is in terms of the overall changes that you've talked about for the business, what's the time frame for implementing those, and how you know that they've worked?

Right. So on China, and I might get you to remind me the questions. So we are actually directly exposed to the Chinese property market, in both the international fund and the Asia funds. So what's interesting there is that we actually -- at the core of the problem in the property market is that government broke people's confidence by trying to put in price caps. People stop buying property, hugely leveraged sector, the vast -- the industry, the vast part of it has actually obviously got financial problems. As a result, they stop building, further driving people away from wanting to buy a property. Property sales -- or property sales of them are extraordinarily low levels, unsustainable low levels. There are, however, a very small number of developers who actually had strong balance sheets, who have continued to build and deliver. And clearly, they're garnering a large part of the sales that are there. So around a company like China Resources Land, who look right at the top of my head, I'm just going to say sales team are down more like 20% than 50% or 60%. But also within that business is a huge shopping mall business, sort of akin to Westfields, which is a very high-quality earnings stream. So you are -- as you'd imagine, the fear around property, some of these assets are incredibly cheap. And I don't know where property sales bounce back to, but the country actually still needs a build-out of its modern housing stock. There will be cities where that's -- we've overbuilt, there will be developments that will never be moved into. But at the core of it, there's still a lot of housing that needs to be built. So that's the direct exposure, but you'd have to say other exposures like our financial stocks in China where we own companies like Ping An Bank or China Merchants Bank are potentially exposed, although at the moment, they have very minimal exposure, and they're just very well-run financial companies. But again, people are concerned about the role they might be forced to play in making things good. So I have forgotten your second question.

Artificial intelligence in the context of making investment decisions for the investment team.

Yes. So look, we're very focused on AI as one of the opportunities. It's a classic chain, where the opportunities on both companies benefiting it, but also being hurt by it. In terms of the investment process itself, clearly, people are out there working on it. In a way, our quant funds, which is in a way, are not really AI in that sense, but has certainly been mechanistic, driven by machines, have been around for a long time and have actually had a pretty 15 years, most of them. We all have our own efforts in that area, but we're not really at the point of doing anything in the house. I mean, we're looking at some -- there's some in the team who are looking at some tools and -- I think that's the way to go. And then changes in terms of the way -- like the work we're doing on our internal sort of investigations. And well, it's hard, it's always hard to know whether the changes you have made actually give you better results or not, because what -- the live example I was able to give you, we clearly got much better results from shorting in the last 3 years than we did previously. Maybe we would have anyway. It was -- there was 1 year there where it's a fantastic period to be shorting. What I'd probably emphasize is that the year before that, we lost little. This year, we've lost some more. And again, that probably there's some thinking to be done around why the performance there is less this year, poorer than that was prior years. I think we've identified what that is, but it's really hard to say. But at the core of it, I think we have some very capable investors doing very good work. And the core principle of what we do is simply, this is that investment opportunities come about because of uncertainty. And investors, like individuals, we are programmed in our DNA to avoid uncertainty. And so when something goes wrong, whether it's happening with China or whether it's just a poor result for a company, the natural response is to overreact. And in fact, the natural response is to project that into the future. That's what humans do. That's where opportunity is coming from in markets. And while that human element remains in markets, I mean, humans can be well aware of their biases and their decision-making shortcomings. But while that remains, while humans are making the decisions in the stock market, I think those opportunities will remain there going.

So we have some questions on the line from [ Mr. Mariano Castillo and Ms. Jaqueline Castillo ]. And there's a few about China, so I'll read them all out, you can kind of summarize them. If China does not manage to rebalance its economy as seems likely, and experience is a long-term deflationary trajectory with anemic consumption share of GDP, do you expect your bottom-up process to nevertheless manage an adequate return? They also ask if the current -- or the China's demographic cliff keeps you up at night? And finally, whether you're familiar with China-based economist Michael Pettis and whether you agree with this [indiscernible] position, the China supply side and infrastructure-driven growth model is unsustainable and thus driving a growing debt burden. If so, would you expect the governance supply side stimulus will only keep China on this path and therefore will not rebalance China to a healthier consumption share of GDP?

Yes. So what I would say is that we don't invest in the Chinese economy, and we don't invest in the Chinese stock market. We buy Chinese companies. And they're very clearly picked for the qualities that those businesses have and the growth opportunities. So I do believe even if the worst outcomes for the Chinese economy remain, that there will be great opportunities to make money. And I think that's something, if you look at the returns of our Japan fund over the last 25 years, it's a place where we have generated double-digit growth or investment returns while the market has given you, I can't remember right now, but 2% or 3% may be a little higher. Sorry, [Indiscernible] middle.

The demographic cliff.

No, the demographics doesn't keep me awake at night, not much does. Demographics move very slowly, they just don't impact. I mean, is the -- is that cliff, is it going to impact how many parcels that [indiscernible] delivers this year or in 5 years' time? Well, of course, there will be some degree of it, but not particularly. Other businesses, if you're buying into baby formula. Well, clearly, there's a big issue there with a rapid drop in [births] at the moment. Doesn't mean that you may not want to buy a company doing that, but you want to be certainly well aware of it. And Michael Pettis, I'm well aware of his arguments and that style of argument. I actually and having watched Japan -- and I don't really buy into his case. I mean, markets do what they do. And there will be areas of over investment and maybe there's areas of over investment in infrastructure and property. This year is a perfect example. The property market is terrible, what a Chinese consumer is doing, they're going back online, they're buying motor vehicles, if they can get a way on the holiday, they're doing that. There are some limitations to that around the visa process at the moment. The economy is clear, and I think it's just about being in the right area rather than worrying about that big picture. I might actually be far more positive. I think there are huge differences between China and Japan. Again, we could have a lovely discussion about that. I don't think it will help any of us particularly.

Okay. I have one final question from [Mr. Mariano and Ms. Jaqueline Castillo]. Do you see the new CEO in an attempt to increase marketing, watering down the Platinum method mindset and culture?

I think we can make a lot of changes without doing that. So I think all of the candidates that we spoke to could see that there is something -- there are some very special qualities about us as an asset management business and that they need to be maintained. But clearly, some changes need to be made as well. So I think everyone is well aware of that, and we'll take care.

There's no further questions online or on the phones.

No more questions. Okay. Well, thank you, everyone, and sorry -- yes, yes. I was going to say we have coffee and tea and some biscuits outside, waiting for you. So please join us.